Despite Biogen profit dip, shares rise on MS drug optimism
BOSTON (Reuters) - Biogen Idec Inc (BIIB.O) said fourth-quarter net profit fell slightly due to a tax accounting error, but the company's shares rose more than 3 percent Monday on higher-than-expected drug sales and optimism over a new multiple sclerosis treatment.
The oral drug BG-12, to be sold under the brand name Tecfidera, is expected to become a leading treatment for multiple sclerosis after its planned second quarter introduction.
Gene Mack, an analyst at Brean Capital LLC, estimates that by 2015, Tecfidera will account for $1.4 billion, or roughly 25 percent, of the company's multiple sclerosis drug sales.
In the fourth quarter, global sales of Biogen's multiple sclerosis drug Tysabri rose 14 percent to $433 million a year ago, while sales of another MS treatment, Avonex, rose 7 percent to $753 million, the company said. Biogen markets Tysabri in conjunction with Elan Corp Plc ELN.I.
"We believe we are entering into an era of significant long-term growth driven by multiple potential new product launches," George Scangos, Biogen's chief executive officer, told analysts on a conference call.
Biogen's shares rose 3.4 percent to $151.14 in morning trading on Nasdaq. Earlier, they traded as high as $156.94.
Net earnings in the quarter were $292 million, or $1.23 per share, compared with $300 million, or $1.22 a share a year ago. Revenue rose 7 percent to a higher-than-expected $1.4 billion.
"The revenue beat was primarily driven by higher than expected Avonex sales," said Geoff Porges, an analyst at Bernstein Research.
Excluding the amortization of certain assets, restructuring charges, and other items, the company earned $1.40 a share, down from $1.51 per share a year earlier. Analysts on average were expecting earnings of $1.46 a share according to data compiled by Thomson Reuters I/B/E/S.
The company said that an error in its tax accounting related to its Denmark facility accumulated over several years had hurt earnings by an unexpected 12 cents per share.
Paul Clancy, Biogen's chief financial officer, said in an interview that the company's auditor is PricewaterhouseCoopers but he declined to assign blame, saying, "it's our responsibility, we collaborate with them."
The Weston, Massachusetts-based company said it expects 2013 earnings per share excluding one-time items to be between $7.15 to $7.25 per share and revenue to grow 10 percent from $5.5 billion in 2012. Analysts on average were forecasting earnings of $7.27 a share and revenue of $5.98 billion.
The short-fall versus expectations is likely due to higher expenses related to the introduction of BG-12, which analysts on average expect will generate around $350 million in 2013.
Clancy cautioned that it is too early to tell what the compliance rate will be for patients taking BG-12, which must be taken twice a day, adding an element of uncertainty to Wall Street's forecasts.
Biogen also sells the cancer drug Rituxan and is in late-stage development of drugs to treat hemophilia. The company expects to launch two hemophilia drugs in late 2013 or early 2014. It is hoping to provide a new injectable interferon for multiple sclerosis that requires fewer doses than current injectable treatments, including Avonex.
(Additional reporting By Caroline Humer; Editing by Maureen Bavdek and Grant McCool)